Property market growing, but not in a “straight line”
New Zealand's national median price has now risen for five consecutive months, although the pace of growth has slowed, CoreLogic has reported.
The median rose 0.4% in October, 0.7% in November and 1.0% in December, before falling to 0.4% in January and 0.3% in February.
In total, the median has increased 2.8% since bottoming out in September, although it remains 10.8% below its peak.
CoreLogic NZ Chief Property Economist Kelvin Davidson said the data showed there wasn't a “straight-line” recovery occurring in the property market.
“Given that mortgage rates remain high and property sales volumes through January remained at near record-lows, buyers and sellers are still taking their time and this is flowing through to more subdued value growth,” he said.
“For new entrants to the housing market, there are still significant challenges in terms of saving the deposit and satisfying loan serviceability criteria. Investors are also facing challenges from high mortgage rates too, while even existing owner-occupiers looking to move up the ladder still need to assess their finances closely.”
Mr Davidson said the Reserve Bank of New Zealand was unlikely to cut interest rates soon, and could potentially make another rate hike, which meant rates were likely to remain elevated for the foreseeable future.
“As a result, we could continue to see mixed results across the housing market, with localised factors affecting each region and stretched affordability continuing to restrict growth in property demand and therefore price growth too,” he said.
What to expect for the rest of 2024
Looking ahead, Mr Davidson forecast that national sales volumes in 2024 would be about 10% higher than last year, while the national median price would rise by about 5%.
“But that’s coming from a low base, and the averages could also mask quite a bit of regional variance, with the main centres boosted by stronger population growth, yet some other areas perhaps held back by affordability concerns,” he said.
“It will also be worth keeping an eye on each of the various buyer groups. First home buyers are still enjoying market conditions for now, using KiwiSaver for at least part of the deposit, and making full use of the low deposit lending allowances at the banks. By contrast, mortgaged investors remain a bit quieter. However, they're a group to watch closely in the coming months, as tax and lending regulations shift.”
This could be a great time to buy, with more stock coming onto the market and prices rising only moderately. As you know, it’s generally best for buyers to get a pre-approval before they begin the home-hunting process, so please ask your clients to contact me if they’re planning to purchase a property later this year.